Unfinished business: Accelerating women’s path to power

Women in businessThe year may be 2017 but the glass ceiling is barely cracked, let alone shattered. While the gender diversity issue has been on the business agenda for many years now, more than a third of businesses still have no women at a senior management level.

Indeed, as new Grant Thornton research confirms that women’s path to power in today’s businesses is painfully slow, a rewrite of the gender equality playbook may be long overdue.

According to the annual Grant Thornton International Global Research report, Women in Business: New perspectives on risk and reward - released today for International Women’s Day—the percentage of women in senior management teams has risen globally just one percent in the last year, from 24% in 2016 to 25% in 2017. At the same time, the number of organizations with no female participation at a senior level has risen from 33% in 2016 to 34% in 2017.

Drawing on a survey of 5,520 business leaders and in-depth interviews with chief executive officers, managing directors, chairmen and other senior decision-makers from all industry sectors in mid-market businesses in 36 economies, the annual study looks at the barriers and enablers along the path to business leadership.

U.S. business leaders still mostly men Even though research has shown there are clear benefits to hiring and promoting more women into leadership positions, progress in corporate America—especially at the top—appears stalled. Women make up more than half of the U.S. workforce, yet they remain significantly underrepresented on corporate boards and in the ranks of corporate executives.

Just 5% of S&P 500 companies are headed by a female CEO, 20% of board seats are held by women, and 25% of executive and senior-level managers are women, according to Catalyst, a nonprofit that works to accelerate progress for women in business. A 2016 Government Accountability Office report on women directors of companies in the S&P 1500 found that women account for just 16% of corporate board members and estimated that, if women started joining boards as often as men today, it would take another 40 years for women to reach parity on corporate boards.

It’s not just CEO roles which are being dominated by men. According to a study by recruiter and succession planning firm Korn Ferry, among the largest 1,000 U.S. companies by revenue, only 12% had a woman in the CFO role as of July 2016. There were more female finance chiefs than CEOs, but significantly fewer than the number of women who held posts as chief information officer, chief marketing officer, or chief human resources officer.

Women in business

Slow progress in path to power Why are so few women making it to the top? There are a host of reasons that might explain the lack of progress in women’s climb up the corporate ladder.

  1. Creeping complacency. According to the Grant Thornton research, diversity fatigue may have set in within some companies. Combined with microeconomic and geopolitical uncertainty, today’s leaders are concerned with reducing costs and retaining talent, relegating diversity to the nice-to-have agenda bucket.

  2. Outdated leadership models. Women are looking for a more fundamental shift in what leadership looks like and what is expected of people in senior leadership positions. The “think-manager-think-male” mindset may be still the default for business leaders. This bias is often supported by gender stereotypes of leadership—women “take care,” while men “take charge.” As the Grant Thornton research suggests, businesses need to encourage a belief that no single behavioral style is best, whether controlling or implementing, supportive or promoting.

    As Pamela Harless, chief people and culture officer, Grant Thornton US notes, “It’s the combination of all those styles that lead to better decisions. Individuals need permission to bring their whole selves to work. In so doing, a company creates a more diverse set of role models, allowing individuals to design an authentic leadership style that is in tune with their natural selves.”

    Lisa Walkush, principal, strategy and performance improvement, and head of Grant Thornton’s national life sciences industry sector, agreed that a new definition of leadership will need to be created, especially as Millennials begin to work their way up the ladder.

    “Millennials work very differently than we do,” Walkush explained. “Women, in particular, have different styles of leadership. Women tend to get things done and not spend so much time on social activities. Family and other commitments require them to prioritize differently. In addition, women tend to mentor and coach differently. They understand that you can deliver tough messages and have difficult conversations without acting like a dictator.”

  3. Lack of support. A growing area of study explores the tendency for women to be mentored and not sponsored. A sponsor advocates for employees below them at the decision-making table when it comes to staffing high-profile projects and promotions.

    Walkush stressed that women who are in leadership roles need to proactively advocate for other females in the organization. “We need women to serve as sponsors and really take that role seriously. As a female principal, I make sure I do everything I can to retain and help develop female managers.”

  4. The Man Code. The man code is about avoiding all things feminine which is perceived to be soft and weak with no place in business. There’s also the belief that if men advocate for women, they are leaving other men behind. At the end of the day, solving gender equity is still regarded as “women’s business”.

    Tracy McShane-Wilson, executive director, talent acquisition, Grant Thornton US, also suggested that the slow progress in resolving the gender equality challenge is not an issue of bias, unconscious or otherwise, but rather a question of tradition. “When you review the workplace landscape over the past 50 years, you find that what has been traditional has been traditionally very good for men. But what is good for women is, in fact, good for all. The good news is that we have smart, helpful, dynamic men—particularly here at Grant Thornton—who want to make a difference. They want women to have as many advancement opportunities as men do.”

  5. The glass cliff. It is a phrase coined by Michelle Ryan and Alex Haslam of England’s University of Exeter in 2004 to refer to a phenomenon in which women leaders are more likely to be offered the top position at companies that are struggling or in crisis. That may be because men see the job as too risky or that women realize that the best way to prove their mettle is to take on the toughest assignments. Indeed, research by Alison Cook and Christy Glass of Utah State University supports this theory. In a study of the 50 women CEOs of Fortune 500 companies through 2014, it was found that 42% were appointed during times of crisis, compared with 22% of a matched sample of men in the same period. Those women also began their jobs with less influence; only 13% who became CEOs were also named chairman of the board—compared with 50% of the men.

  6. Unequal promotion opportunities. While a significant 75% of CEOs include gender equality in their top ten business priorities, the largest companies are not moving the needle for gender outcomes. According to McKinsey research, corporate America promotes men at 30 percent higher rates than women during their early career stages and entry-level women are significantly more likely than men to have spent five or more years in the same role.

McShane-Wilson believes the main culprit for a lack of women in leadership positions has to do with the pipeline of talent. “What I’ve noticed throughout my 20 years of recruitment experience is that men and women enter their careers at a pretty level playing field but by the time you reach the C-suite that pipeline drops to about 20 percent for women.”

Women still have a difficult time picturing women in leadership roles, according to McShane-Wilson. She explained that Grant Thornton has established Business Resource Groups and a Women at Grant Thornton program to uncover the issues holding women back. “In the past 20-30 years, women have had to make a choice between professional and personal goals. It’s important for women to know that it’s not an ‘either-or’; it can be an ‘and’.”

Grant Thornton, named one of the 2017 Top Companies for Executive Women by the National Association for Female Executives (NAFE), has long been committed to enhancing the recruitment, retention and advancement of women in leadership positions. For the past 11 years, it has landed on the “Working Mother 100 Best Companies” list. Of its 7,283 US employees, 44% are women, of whom 34% are senior managers and 20% are corporate executives. Women represent 18% of the company’s board of directors and 43% of female employees have earned promotions to manager level or above. Grant Thornton’s innovative approach to fostering a culture of inclusiveness includes training for all managers in the hiring, management and advancement of women.

“Individuals need permission to bring their whole selves to work. In so doing, a company creates a more diverse set of role models, allowing individuals to design an authentic leadership style that is in tune with their natural selves.”

Pamela Harless, chief people and culture officer, Grant Thornton US
Why women matter Within the context of increased uncertainty and complexity, it is critical that businesses resist group-think and welcome a wide range of perspectives. Crafting a definition of new leadership and providing the changing tools of empowerment are essential to grow and meet the challenges of today.

“I’m very aware that we should always have people leading us who are reflective of the entire firm,” Grant Thornton’s Walkush said. “It’s true that the more diverse a group is, the more likely you’ll come away with different ideas with which to solve client problems.”

Gender balance is a big business opportunity as global talent and customers are more gender balanced than ever before. Women make up half the U.S. workforce, drive 80% of consumer buying decisions, and represent 60% of global university graduates. It boosts bottom-line results, drives growth with new customer insights, and enhances productivity with better talent acquisition and retention.

Fixing the gender diversity issue is simply good for business. Recent findings from MSCI ESG, a global research firm, indicate that companies with strong female board representation generated a Return on Equity of 10.1% per year versus 7.4% for those without. Catalyst also found that more gender-diverse companies performed 53% better than those that are not gender diverse.

Women's approach to risk and reward One key responsibility of all senior leaders that is vital to business success is the ability to assess business risk and opportunity. In this year’s annual study of women in business, Grant Thornton reveals that men and women perceive and respond to risk in different ways. When brought together, these strengths facilitate effective risk strategies for the sustainable growth of the business.

Interestingly, the Grant Thornton research dispels the myth that women are more risk averse than men. In fact, the research reveals that men see higher risk than women in 8 out of 10 categories. Security and competitor activity are the two exceptions. While women consider context and nuance to fully understand the implications of risk, men adopt a simpler acceptance model based on whether the risk will facilitate strategic growth.

However, the findings reveal differences in how men and women response to a business risk. While men are likely to respond through action, women are more apt to respond through feeling. When confronted with uncertainty, women tend to report fear which diminishes the risk while men report anger which tends to increase the risk.

Generally, women tend to require more analysis because they have a greater need for a balanced and complete view before taking action while men are prone to make a quick decision in order to facilitate action.

Walkush affirmed that she tends to take more risks than some of her male partners. “I tend to look at opportunities as challenges to learn something new,” she said. Walkush relayed a situation in which she was charged with helping a client prepare for an acquisition. “The client was from an industry in which we did not have a lot of depth. Other partners were uncomfortable with taking the risk when we didn’t possess much expertise in that area. We ended up doing that work and gaining another acquisition assignment from the client resulting in a total of $4M of work.”

Yet risk is only one side of the business growth coin. Executive leaders must also possess the ability to spot and take advantage of strategic opportunities. Findings from the Grant Thornton study reveal that women tend to see less opportunity than men across most areas of business life (security is the only exception). This may be the result of a confidence gap as women tend to consider themselves equally capable as their co-workers while the majority of men consider themselves more capable than their co-workers. As a result, men will likely position themselves for new opportunities even when they’re far less qualified than women.

Grant Thornton’s McShane-Wilson agreed that for some women in the workplace, a confidence gap might be at play in keeping them from ascending the corporate ladder. “It’s important that women are open and understanding of the unique strengths they bring to the table,” McShane-Wilson explained. “There is huge value in understanding what you are really good at and striving to improve in those areas. Those things that make you YOU are where you should be leaning in.”

As Francesca Lagerberg, global leader for tax services, Grant Thornton International stated in the firm’s research report on the role of women in business, “The old-world order is being challenged in a way that it’s never been challenged before, and risk has become a much more significant factor in decision-making. A mixed gender team brings a broader range of input, help and consideration to bear on big, strategic issues.”

Kick-start a culture of diversity How can organizations change their culture to ensure gender parity makes its way to the C-suite? The following recommendations can help to serve as a real road map to usher in diversity in the workforce.

  • Don’t be complacent. Continue to champion diversity throughout the firm, not just at the top. Articulate the commercial necessity to change on an ongoing basis to inspire those who are not yet convinced of the need to take significant steps.
  • Encourage diverse leadership styles and role models. The benefits of diversity will not emerge if people’s differences aren’t allowed to surface in their job. Leadership styles do not need to conform to predetermined molds, nor must leadership be all-consuming.
  • Invest in sponsorship programs, not just mentoring. Not only will a sponsor champion the prospects and skills of women in the workplace, they will protect them enough to take risks and make mistakes without these hampering an individual’s career.
  • Build mixed gender teams for effective risk management. Dynamic, resilient companies will navigate the extremes with a more balanced assessment of the risks and rewards. Companies that fail to bring women to the table will jeopardize their long-term growth.
  • Provide women with leadership opportunities that make them familiar with risk. Experience and leadership bring confidence and familiarity. Companies should provide young women with on-the-job experiences that introduces them to the process of risk management. The more familiar you are with considering risk, the more capable and confident you will become.
  • Create a culture where taking calculated risks is part of successful business strategy. Companies need to allow more room for women to experiment and “fail well”. Establish a growth mindset where individuals and collective teams of decision-makers can learn from their mistakes and actively seek out new challenges.
  • Use neutral terms to avoid gender stereotyping. Language like “risk averse” or “risk loving” carries hidden messages. Recognize the terms used to frame discussions around risk; assess whether they’re appropriate, and be mindful of unconscious bias.
  • Include opportunities in the company risk register. Avoid referring to risk exclusively as a threat and include opportunities for growth. Allow mixed leadership teams to contribute ideas and observations about threats and opportunities.
  • Engage in a more collaborative risk management process. Most often women holding senior leadership positions are in HR or finance. Facilitate the involvement of these positions in discussions around risk as business opportunity and threat.

Read the full report on which this article is based, Women in Business: New Perspectives on Risk and Reward